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WorldNet works on portal strategy

With a string of new services and a revamped pricing structure, AT&T's WorldNet service regains momentum lost over several years of lackluster marketing.

With a string of new services and a revamped pricing structure, AT&T's WorldNet service is beginning to regain momentum lost over several years of lackluster marketing.

The company is building itself up as a kind of communications portal--a one-stop center for communications services, that gives it a different focus than competitors like the content-driven America Online or traditional ISPs.

Today's unveiling of the I M Here service, which combines traditional Internet instant chat with voice messaging, is the latest piece in a puzzle that already includes Web-initiated conference calling, linked voice and email, and traditional email and long distance services.

But AT&T's Net service is finding its identity at a time when the company's own Net strategy is rapidly changing. The long distance giant is merging with Tele-Communications Incorporated, the largest investor in the @Home Internet service, and has recently touted that as consumers' broadband future.

Problem is, there may be diminishing room for WorldNet in that cable-driven future. AT&T executives have fought hard at the Federal Communications Commission to make sure they won't have to unbundle @Home's cable pipes for other ISPs like AOL or MindSpring Enterprises.

For now, this gives AT&T a solid position in both the narrowband and broadband markets. But it may eventually force WorldNet to focus on subscribers who are no longer dial-up customers in order to keep its communications portal cachet.

Better late than never
Analysts say WorldNet's renewed push is long overdue.

"WorldNet has been stagnating for quite a long period of time," said Abhi Chaki, a research analyst with Jupiter Communications. "There are indications from the executive suite at AT&T that they have to get their act together or there will be significant reorgs in that division."

By comparison to other national ISPs, WorldNet is not in such bad shape. It boasts about 1.3 million users--far less than AOL's 15 million, but more than any of its telco rivals' consumer Net efforts. It has showed up high on several customer satisfaction lists in recent months.

But these figures must be contrasted with the company's potential, analysts say. AT&T currently offers long distance service to about 46 percent of U.S. phone customers. That's a huge marketing base, which the company has not yet demonstrated it can use effectively.

Mike Chaplo, WorldNet's vice president of marketing, says that's changing.

"We've got a large base of very loyal AT&T customers out there," he said. "Clearly we've got opportunity there to service that group."

The company's surveys have said that these consumers would use AT&T for all of their communications products online and off, if the telco can wrap them all into a single integrated package, he said.

This doesn't mean the service is all dial tone and no content, however. The company has pulled together community sites, a game area, and pulls syndicated news and other content from around the Web.

"There are reasons that people will want to stay on WorldNet," Chaplo said. But ultimately, these content-style items are intended to draw people into the network of communications services, he said.

The "communications portal" strategy, while a more difficult sell for consumers than the browse-through environment of AOL, is a good one for AT&T, analysts say. It will require that they do a better job doing old-fashioned marketing to their existing customers, however.

"They have to mine that data, and figure out what they have to do to bring those customers in," Chakhi said.

Broadband, or bust?
But another trick for WorldNet is to figure out what do as more of that customer base decides to move to the world of broadband, either through AT&T's own cable services or through digital subscriber line (DSL) services.

Company executives paint WorldNet as the narrowband leg of a service that will eventually be able to serve customers at any bandwidth.

If AT&T does move closer to the management of @Home, analysts say WorldNet and the cable service will likely start to resemble each other, offering consumers a similar interface and set of services.

In this capacity, WorldNet could serve as consumers' introductions to the broadband world. And as long as price or lack of interest keeps high-speed options out of the hands of a significant portion of Net subscribers, WorldNet will play a critical role as AT&T's narrowband provider.

But officials are looking at ways to keep the service evolving, just as companies like America Online are desperately looking for ways to ferry their own services into cable or other high-speed pipes.

"As long as the industry supports narrowband, there will always be a play for this kind of service," Chaplo said.

"This is for now. What we'll see unfolding will be a future strategy for WorldNet," he added. "WorldNet could evolve several ways."

Whatever the final link between WorldNet and the broadband world, the TCI investment and other Internet have shown that AT&T is girding itself to be a defining player in the access game, analysts say.

"As access mechanisms evolve, it's clear that AT&T will be very influential in determining the shape of the pipe into users' homes," said Zona Research analyst Ron Rappaport.